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In summary what was the FHL tax regime?

The furnished holiday let (FHL) tax regime was a part of the legislation which treated the letting of certain qualifying properties, known as furnished holiday lets, as a trading activity rather than a property business. This therefore allowed access to specific tax reliefs and provisions which only related to trades such as capital allowances, capital gains reliefs, deductibility of interest costs, treatment of pension contributions and national insurance. More details on the FHL tax regime and qualifying conditions can be found in the Furnished holiday lets guidance note.

The FHL tax regime is abolished from 6 April 2025 for income tax and capital gains tax and from 1 April 2025 for corporation tax. After this date FHL income and gains will form part of the person’s UK or overseas property business.

Will this mean higher tax costs?

This will depend on the circumstance of the taxpayer. Prior to the abolition of the FHL regime any finance costs such as mortgage interest